import of sevices

[CASUNIL BHANSALI]

Pls. opine for following FACTS A Ltd company registered in India making Export to USA on DDP basis ( Delivered Duty Paid ). Now the Company has appointed a CHA in USA whose duty is to pay the Import duty ,take the delivery of the Goods and make arrangement for delivery of Goods to the Buyer's place. The CHA is raising its Invoice on Indian Company for his services and reimburesement of Import duty and other expense seperatly. The Indian Company is making payment in Foreign currency through proper Banking Channel to the CHA. The Indian Company is also paying professional service charges to different persons in abroad for procuring orders for the Indian Company. Querry:- 1) Whether the service rendered by the CHA is taxable under the SERVICE TAX ? 2) Pl clariy about the service tax implication on reimbursement of Import Duty and other Expenses. 3) Whether paying of professional service charges to different persons in abroad for procuring orders for the Indian Company is taxable under the Service Tax..

[Rama Krishana]

Apparently, services provided by CHA in USA and amount paid for procuring orders Indian Company are qualified to be an import of service and service tax is payable on reverse charge method by A Ltd. The customs duty paid in USA by the CHA are not taxable and would not be included in the value of taxable services provided by CHA. Regarding other reimbursement of expenses, you need to ascertain whether these expenses have been incurred in the capacity of "Pure Agent" or not? If other expenditure incurred in the capacity of "Pure Agent" the same shall not be subject to service tax.

AI Summary

Import of services: reverse-charge applies to overseas CHA and agents; customs duty reimbursements excluded if pure agent. Services from a foreign CHA and overseas agents procuring orders are import of services and taxable on the Indian recipient under the reverse charge mechanism. Customs duty reimbursed separately to the CHA is excluded from the taxable value. Other reimbursements must be tested against the pure agent principle; where they satisfy pure agent conditions they are excluded, otherwise they are includible in taxable service value and subject to reverse charge.